Using Disparate Impact to Restore Housing Affordability and

Property Rights in Coloradoby Randal O’Toole

727 East 16th Avenue | Denver, Colorado 80203

www.IndependenceInstitute.org | 303-279-6536 | 303-279-4176 fax

IP-1-2017 | February 2017

1

Outside of California, Hawaii, and New York City, Boulder has the least affordable housing in the nation. Median home prices are more than five times median family incomes, whereas in the vast majority of urban areas they are less than three times median incomes. Boulder’s high housing prices are not due to a shortage of land: more than 88 percent of Boulder County is rural. Instead, they are a result of land-use restrictions that have created artificial housing shortages, including both the Boulder greenbelt and limits on the number of building permits issued each year.

Boulder is not the only urban area in Colorado with unaffordable housing. Median housing prices throughout the Denver metropolitan area, including the Denver-Aurora, Lafayette-Louisville, and Longmont urbanized areas, are all well above three times median family incomes. These high prices are due to the urban-growth boundary drawn by the Denver Regional Council of Governments (DRCOG).

Denver- and Boulder-area housing wasn’t always so expensive. In 1969, median home prices throughout the Denver area were less than twice median family incomes. Prices first became unaffordable in Boulder in the 1990s and in the rest of the Denver metropolitan area in the 2000s.

Attempts to mitigate the effects of the land-use laws on housing by subsidizing a few units of so-called affordable housing have done little to relieve the problem, and some have actually made the problem worse. Denver’s and Boulder’s inclusionary zoning policy require developers to set aside 10 to 20 percent of the homes or apartments they build for moderate- to low-income people, but this has produced few affordable housing units and actually

reduced housing affordability. Developers naturally pass the costs of the below-market units to buyers of the market units. This increases the price of new housing and, because sellers of existing homes raise their prices to take advantage of the increase in new home prices, makes the overall housing market less affordable.

These land-use restrictions have three negative effects on low-income minorities. First, they make housing more expensive. Second, they make housing prices more volatile, which makes buying a home riskier than in places that do not have such restrictions. Third, they are a major contributor to growing wealth inequality as these government-created barriers to homeownership have dramatically increased the share of families who cannot afford, or must go deeply in debt, to buy their own homes.

Fortunately, a June 2015 Supreme Court decision offers a legal remedy to this problem. This decision authorized the use of disparate-impact considerations in judging whether government agencies are following the Fair Housing Act. That act specifically forbids the disparate

treatment of minorities—that is, intentional discrimination in housing sales and rentals. The disparate-impact doctrine asserts that policies such as zoning and land-use regulation that make it more difficult for minorities to obtain housing—even if the policies are not intended to do so—are equally in violation of the law unless the policies can be “justified by a legitimate rationale.”

According to disparate-impact regulations published by the Department of Housing and Urban Development in February 2013, prohibited conduct includes “enacting or implementing land-use rules, ordinances, policies, or procedures that

Executive Summary

Outside of

California, Hawaii,

and New York

City, Boulder has

the least afford-

able housing in

the nation.

2

restrict or deny housing opportunities or otherwise make unavailable or deny dwellings to persons because of race, color, religion, sex, handicap, familial status, or national origin.” Numerous land-use rules, ordinances, and policies increase housing costs. Since some minorities, such as blacks, are more likely to have lower-than-average incomes, any such rules or policies reduce their housing opportunities and therefore potentially violate the Fair Housing Act.

HUD’s implementation, known as Affirmatively Furthering Fair Housing, focuses on ending income segregation of communities as a means of ending racial segregation. However, this will be a costly policy that will do little to make housing more affordable to most low-income minority families.

As an alternative, fair-housing advocates should question policies that increase housing costs by intruding on private property rights. These include growth-management tools such as urban-growth boundaries, the use of eminent domain for economic development, rent control, inclusionary zoning, and excessive impact fees, all of which benefit a few at everyone else’s expense. In approving the disparate-impact doctrine, the Supreme Court has offered a tool to both affordable-housing advocates and property-rights advocates for undoing these rules and policies that make housing less affordable.

Over the past 50 years, owners of private property have seen their rights steadily eroded by state and local land-use laws that increasingly restrict how both rural and urban property owners can use their land. On one hand, California, Hawaii, Oregon, and several other states have told rural property owners that they cannot use their land for anything but farming and forestry even though the nation has a surplus of both farms and forest lands. On the other hand, some large cities have told urban property owners that they cannot charge rents at fair market value, and other cities have told urban homebuilders that they must sell 15 to 20 percent of the homes they build for less than cost in order to provide a few lucky people with “affordable” housing.

Unfortunately, the Supreme Court has granted local and state governments the right to impose such restrictions on property rights. In Penn Central v. New

York City, the court ruled that a city could

regulate away much of the value of someone’s land solely for the benefit of others even though the proposed private use of that land would have no negative effects on their neighbors.1 Although the issue in question was the modification of a historic building in Manhattan, the ruling has been used to justify the taking of property rights away from rural landowners to develop their land for urban or suburban uses.

Other Supreme Court rulings have further eroded property rights. In Kelo v. City of

New London, the court ruled that a city could take land by eminent domain from one set of private landowners and give it to other private owners on the premise that the new owners would provide “public benefits” by paying more taxes for the land.2 Fortunately, a new Supreme Court ruling offers the opportunity to reverse all of those losses of property rights.

Introduction

Over the past 50

years, owners of

private property

have seen their

rights steadily

eroded by state

and local land-use

laws that increas-

ingly restrict how

both rural and

urban property

owners can use

their land.

3

...a government

body or other

entity may have

no intention of

discriminating

against minorities

yet still be guilty

of unfair housing

if the result of its

policy adversely

affects minorities.

On June 25, 2015, the Supreme Court released its decision in Texas Department of

Housing v. Inclusive Communities Project.3 This decision authorized the use of “disparate impact” in judging the fair housing policies of cities and suburbs. While some people still believe that the 5–4 majority decided the case wrongly, the decision offers a way of restoring property rights in many states and regions where such restrictions have reduced housing affordability.

The Fair Housing Act of 1968 made it illegal for anyone to “refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, or national origin.” Such discrimination is known as “disparate treatment.” The doctrine of disparate impact goes a step further. As the majority Supreme Court opinion written by Justice Anthony Kennedy noted, “In contrast to a disparate-treatment case, where a ‘plaintiff must establish that the defendant had a discriminatory intent or motive,’ a plaintiff bringing a disparate-impact claim challenges practices that have a ‘disproportionately adverse effect on minorities’ and are otherwise unjustified by a legitimate rationale.”4 In other words, a government body or other entity may have no intention of discriminating against minorities yet still be guilty of unfair housing if the result of its policy adversely affects minorities.

In reaching this conclusion, the court relied on a precedent set by Griggs v. Duke

Power, a fair employment case. Prior to 1964, Duke Power Co. had a policy of discriminating against hiring blacks for manual labor jobs. When the Civil Rights

Act of 1964 made such discrimination illegal, Duke Power began requiring that manual laborers have high school diplomas and pass two intelligence tests—requirements that hadn’t been imposed on its existing white laborers. Without finding that this policy was intended to discriminate against blacks, the court concluded that it had a disparate impact because blacks were less likely to have high school diplomas and there was no “business necessity” for laborers to have such diplomas.

Opponents of the disparate-impact doctrine, including the four dissenting members of the Court, argue that disparate impact opens the door to endless litigation. To use an example cited by Justice Samuel Alito’s dissenting opinion, the City of St. Paul, MN passed an ordinance requiring landlords to deal with rodent infestations. Housing advocates argued that this would increase the price of housing, and since minorities were more likely to be poor, they would be disproportionately affected by the resulting rent increases. “No one wants to live in a rat’s nest,” wrote Alito, yet under the disparate impact theory, “a city can’t even make slumlords kill rats without fear of a lawsuit.”5 In fact it can, under the disparate-impact doctrine, if it can prove that it has a legitimate rationale for doing so, such as showing that rodent control reduces the spread of disease.

In the case that was actually before the court, the Texas Department of Housing allocated low-income housing tax credits to developers in various neighborhoods around the state. The Inclusive Communities Project (ICP) found that more than 90 percent of such credits in the city of Dallas “were

The Supreme Court’s Disparate Impact Decision

4

The Supreme

Court’s dispa-

rate impact ruling

could effectively

overturn numer-

ous state and

local laws, ordi-

nances, and regu-

lations that make

housing more

expensive.

located in census tracts with less than 50% Caucasian residents,” and argued that this was an example of disparate impact because it promoted existing patterns of segregated housing. Based on ICP’s statistical evidence, the District Court for the Northern District of Texas agreed.

On appeal, the Fifth Circuit Court of Appeals agreed that disparate impacts were cognizable, that is, subject to legal review, but reversed the lower court’s decision, saying that ICP had failed to prove that an alternative method of allocating tax credits would have a less discriminatory effect. Despite winning the case, the Texas Department of Housing asked the Supreme Court to review the contention that disparate impacts were cognizable in the first place.

While the majority agreed that they were, Alito’s dissent pointed out that this ruling opens up a rat’s nest for public and private housing providers because any policy can be construed as having a negative effect on low-income minorities. For example, ICP challenged the Texas Department of Housing’s allocation of tax credits to low-income neighborhoods, but if it had allocated more credits to high-income neighborhoods, as ICP wanted, the higher costs of providing housing in those upscale neighborhoods would result in fewer housing units for a fixed amount of tax credits, which in itself would have a disparate effect on low-income minorities.6

Alito’s dissent didn’t rule out disparate impact entirely. “Disparate impact can be evidence of disparate treatment,” agreed Alito. For example, the facts in the Griggs v.

Duke Power case “created a strong inference of discriminatory intent,” and “federal judges have decades of experience sniffing out pretext.”7

Another part of the rat’s nest is in determining which disparate impacts can

be “justified by a legitimate rationale.” The Texas Department of Housing, for example, argued that federal law requires that it give “preference” to giving tax credits in census tracts populated predominately by low-income residents.8 At what point does the legal requirement for such a preference become illegitimate because of the overriding need to desegregate housing?

Some guidance is provided by a disparate-impact rule published by the Department of Housing and Urban Development (HUD) two years before the Supreme Court decision. The rule applies to just two classes of parties. First are banks and other financial firms offering loans or other financial assistance to prospective homeowners.9 Second are government agencies “Enacting or implementing land-use rules, ordinances, policies, or procedures that restrict or deny housing opportunities or otherwise make unavailable or deny dwellings to persons because of race, color, religion, sex, handicap, familial status, or national origin.”10 While there is no guarantee that other parties won’t use disparate impact to challenge private landlord or homebuilder policies, HUD appears to be solely interested in the impact government land-use regulation and lenders’ mortgage policies have on protected groups of people.

The Supreme Court’s disparate impact ruling could effectively overturn numerous state and local laws, ordinances, and regulations that make housing more expensive. Since some protected classes, such as blacks, are more likely than average to have lower incomes, any policy that increases housing prices would have disparate impacts on these groups. To keep these laws and rules in place, state and local governments would have to prove that their laws and rules serve some other social value and that there is no other way

5

of achieving that value that doesn’t have an impact on low-income minorities.

HUD rules add that, “A practice has a discriminatory effect where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.”11

HUD’s rule on disparate impacts outlines a process to determine whether minorities may be suffering from illegal disparate impacts of state or regional land-use regulations. The process requires three steps:1. A challenger must prove that

a “practice results in, or would predictably result in, a discriminatory effect.” This can often be done using statistics and analyses showing a causal relationship behind those statistics.

2. Once such proof is made, the defendant must “prove that the challenged practice is necessary to achieve one or more of its substantial, legitimate, nondiscriminatory interests.”

3. Even if such proof is offered, the challenger “may still establish liability by proving that the substantial, legitimate, nondiscriminatory interest could be served by a practice that has a less discriminatory effect.”12

Critics of disparate impact, including the dissenters in the Supreme Court case, believe that challengers must meet a fourth test showing that there was a discriminatory intent or motive behind the policies that led to unfair housing; in other words, that the policies are an example of disparate treatment, not just disparate impact. While this test might be more difficult to prove, many regional land-use policies meet all four tests.

“Government

regulation is

responsible

for high hous-

ing costs where

they exist,” say

Harvard econo-

mist Edward

Glaeser and

Wharton econo-

mist Joseph

Gyourko.

The Disparate Impact of Growth ManagementCalifornia, Hawaii, Oregon, Washington, and several other states have passed laws aimed at managing growth, usually by controlling whether growth takes place at the urban fringe or by increasing densities inside of existing developed areas. These laws work by taking developmental rights away from existing landowners. For example, Hawaii has zoned 95 percent of the state as “agriculture,” “conservation,” or “rural,” and heavily restricts property owners in these areas from building homes.13 As a result of this zoning, the

2010 census found that 92 percent of Hawaii’s residents lived on just 6 percent of the land in the state.14

There is no doubt in the minds of economists who have studied these rules that they make housing less affordable. • “Government regulation is responsible

for high housing costs where they exist,” say Harvard economist Edward Glaeser and Wharton economist Joseph Gyourko.15

6

• University of North Carolina real-estate economists Donald Jud and Daniel Winkler found that rapid growth in housing prices is strongly “correlated with restrictive growth management policies and limitations on land availability.”16

• Canadian real-estate analysts Tsuriel Somerville and Christopher Mayer found that “Metropolitan areas with more extensive regulation can have up to 45 percent fewer [housing] starts and price elasticities that are more than 20 percent lower than those in less-regulated markets.”17

• Federal Research economist Raven Malloy found that “in places with relatively few barriers to construction, an increase in housing demand leads to a large number of new housing units and only a moderate increase in housing prices,” while “places with more regulation experience a 17 percent smaller expansion of the housing stock and almost double the increase in housing prices.”18

• Research by economists Henry Pollakowsi and Susan Wachter concluded that “land-use regulations raise housing and developed land prices.”19

• Three economists from the University of California, Berkeley found that “regulatory stringency is consistently associated with higher costs for construction, longer delays in completing projects, and greater uncertainty about the elapsed time to completion of residential developments.”20

• University of Washington economist Theo Eicher compared a database of land-use regulations with housing prices and found that high housing prices are “associated with cost-increasing land-use regulations (approval delays) and statewide growth management.”21

Growth-management and other land-use regulation has several other negative impacts on low-income families. First, the “reduction in price elasticities” mentioned by Somerville and Mayer mean that regulation makes housing prices more volatile, in turn making homeownership a riskier investment. Supply price elasticity measures the response of supply to a change in demand; a low elasticity means the supply doesn’t respond as much, so small increases in demand can lead to large increases in price while small decreases in demand can lead to large decreases in price.

As a result, confirm economists Haifang Huang and Yao Tang, “More restrictive residential land use regulations and geographic land constraints are linked to larger booms and busts in housing prices.” Their comparison of land-use regulations and housing prices in more than 300 cities in the United States found that, “The natural and man-made constraints also amplify price responses to an initial positive mortgage-credit supply shock, leading to greater price increases in the boom and subsequently bigger losses.” In other words, a bigger bubble.22

The increased volatility in housing prices that results from land-use restrictions is harmful in many ways. Such volatility “transfers asset values between groups; creates financial instability. . . ; makes monetary policy more difficult. . . [and] create oscillating wealth effects feeding through to consumption spending,” say economists from the London School of Economics.23

Second, high housing costs have been associated with higher unemployment rates. In regions where housing is affordable, neighborhoods with high homeownership rates tend to have lower unemployment rates than neighborhoods with high renter rates. The reverse is true

The increased

volatility in hous-

ing prices that

results from land-

use restrictions is

harmful in many

ways.

7

in regions where housing is unaffordable because people who own their own homes have a harder time moving when they become unemployed.24 This is partly because of the volatility of housing prices (which means that conditions likely to render someone unemployed are also likely to reduce their home value) and partly because higher home prices mean the transaction costs of moving are higher. The realtor fee for selling a home may be about 5 percent and the downpayment on a new home may be 10 to 20 percent. Both of these are far more affordable if median home prices are about $100,000 than if they are about $300,000.

A third effect of land-use regulation is rising wealth inequality. Thomas Piketty’s book, Capital in the Twenty-First Century, finds that inequality is growing because returns on capital are greater than the rate of economic growth. But a refinement of Piketty’s work by MIT researcher Matthew Rognlie reveals that housing is the main source of growing inequality.

Looking closely at Piketty’s and other data, Rognlie found that “a single component of the capital stock—housing—accounts for nearly 100 percent of the long-term increase in the capital/income ratio, and more than 100 percent of the long-term increase in the net capital share of income.”25 In other words, were it not for housing, inequality would not be growing. Moreover, the reason why housing capital stock is growing is that urban areas in most developed nations, including nearly every country in Europe, Australia, and many states, provinces, and major urban areas in the United States and Canada, have adopted policies intended to limit urban sprawl.

It may be no coincidence that American inequality (as measured by the Gini index) reached its lowest level in 1968, before urban areas outside of Hawaii

had adopted growth-management plans.26 American homeownership rates rapidly grew between 1940 and 1970, after which they leveled off. California and Oregon adopted growth-management planning in the early 1970s, leading homeownership rates in those states to decline after that time. Over the next three decades, more states would adopt some form of growth-management planning including Washington, Florida, New Jersey, and most New England states. This was followed by the stifling of homeownership and growing income inequality. Today, homeownership nationwide stands at 63 percent, while several states without growth-management planning have homeownership rates of nearly 75 percent.

Since Boulder was one the nation’s first urban areas to practice growth management, and in some ways it still has some of the strictest land-use laws in the nation, Boulder has one of the lowest homeownership rates in the nation. In 2013, less than 53 percent of Boulder households owned their own homes, compared with more than 75 percent in some other urban areas. Out of 421 urbanized areas recognized by the Census Bureau in 2013, only 60 had lower homeownership rates than Boulder while 360 had higher.27

All of these effects lend special urgency to the need to repeal the land-use regulations that have made housing unaffordable in the first place. These regulations have had a particularly dramatic effect on minorities in Boulder. Between 2000 and 2010, the population of the Boulder urbanized area grew by 2.0 percent, yet the number of black residents in the area declined by 22.2 percent.28

Denver housing prices have not yet reached such unaffordable levels that the number of blacks living in the Denver-

Boulder has

one of the low-

est homeowner-

ship rates in the

nation. In 2013,

less than 53 per-

cent of Boulder

households

owned their own

homes, com-

pared with more

than 75 percent

in some other

urban areas.

8

Aurora urban area is declining. However, blacks are suffering from a decline in the quality of housing. One way to measure this is the percent of families with white or black heads of households living in single-family vs. multifamily housing. Between 2000 and 2010, the share of families with white heads of households living in single-family housing declined slightly from 69.1 to 67.8 percent. But the share of families with black heads of households living in

single-family housing dropped from 54.0 to 46.4 percent.29 Housing prices also affected tenure in the Denver-Aurora urbanized area: between 2000 and 2010, the share of whites living in their own homes fell by 3.6 percent, but the share of blacks (which was already well below the white share) fell by 11.9 percent.30

Table 1State Value-to-Income Ratios in 1969 and 2013

State 1969 2013 State 1969 2013

Alabama 1.7 2.3 Montana 1.6 3.2

Alaska 1.8 3.1 Nebraska 1.4 2.0

Arizona 1.8 3.0 Nevada 2.1 3.2

Arkansas 1.7 2.2 New Hampshire 1.7 2.9

California 2.2 5.8 New Jersey 2.1 3.5

Colorado 1.8 3.4 New Mexico 1.7 2.9

Connecticut 2.2 3.0 New York 2.1 3.9

Delaware 2.1 3.2 North Carolina 1.6 2.7

D.C 1.8 5.8 North Dakota 1.7 2.2

Florida 1.8 2.8 Ohio 1.7 2.1

Georgia 1.8 2.5 Oklahoma 1.4 2.0

Hawaii 3.0 6.7 Oregon 1.6 3.8

Idaho 1.7 2.8 Pennsylvania 1.4 2.4

Illinois 1.8 2.4 Rhode Island 1.9 3.3

Indiana 1.4 2.0 South Carolina 1.7 2.5

Iowa 1.5 2.0 South Dakota 1.5 2.1

Kansas 1.4 2.0 Tennessee 1.7 2.6

Kentucky 1.7 2.3 Texas 1.4 2.2

Louisiana 1.9 2.5 Utah 1.8 3.2

Maine 1.6 2.8 Vermont 1.8 3.2

Maryland 1.7 3.2 Virginia 1.9 3.2

Massachusetts 1.9 3.9 Washington 1.8 3.6

Michigan 1.6 2.0 West Virginia 1.5 2.0

Minnesota 1.8 2.4 Wisconsin 1.7 2.5

Mississippi 2.4 2.1 Wyoming 1.7 2.8

Missour 1.3 2.3 United States 1.8 2.7

Median home values of owner-occupied homes divided by median family incomes. Sources: 1969 median home values from 1970 Census: Housing Characteristics for States, Cities, and Counties, Volume 1, Part 1 United States, table 1; 1969 median family incomes from “Historical Income Tables,” table S2, “Median Family Income by State, 1959, 1969, 1979, and 1989,” Census Bureau, tinyurl.com/StateMFI59-89; 2013 median family incomes from table B19133 and and median home values from table B25077 of the 2014 American Community Survey.

...between 2000

and 2010, the

share of whites

living in their own

homes fell by 3.6

percent, but the

share of blacks

(which was already

well below the

white share) fell by

11.9 percent.

9

Growth-management supporters often claim that it is demand, not supply, that has made housing expensive. This is belied by the relative equality of housing affordability across the continental United States in 1969, when few states or regions were practicing growth management and developers and homebuilders could meet any demand for new housing (table 1). Hawaii was the only state to implement growth-management planning before 1970, and not coincidentally it also had the least-affordable housing in 1969.

Outside of Hawaii, zoning before 1970 was almost non-existent outside of city limits, and even in cities that had zoning, the time required to get construction permits was fairly brief. San Jose remained very affordable in 1969 despite having been the nation’s fastest-growing urban area for two decades, while Atlanta, Denver, Los Angeles, Miami, Orlando, Phoenix, and other urban areas doubled or even tripled in population between 1950 and 1970 without any stress on housing prices.

Since 1970, California, Oregon, Washington, and most states in New England and on the eastern seaboard, except Georgia and the Carolinas, have implemented some form of growth management either regionally or on a statewide basis. A few urban areas in states that haven’t passed growth-management laws have nevertheless implemented their own growth-management plans, led by Boulder and including Denver and Fort Collins.

While housing affordability has declined everywhere, it has declined the most in growth-management states and regions. In 1969, Colorado housing affordability was almost identical to the national average with median home values that were 1.8 times median family incomes. Today, thanks to growth-management planning in Front Range urban areas, it is far less affordable, with value-to-income ratios of 3.4 vs. a national average of 2.7. The nation’s fastest-growing urban areas over the past two decades have been Houston, Dallas-Ft. Worth, and Atlanta, and they remain affordable because of a lack of growth management.

In response to housing affordability problems, many cities have either promoted the construction of more multifamily housing or subsidized such housing. But even the most lavish subsidies produce far too few new units of housing to improve the overall level of housing affordability. For example, according to the state of California, such subsidies have added no more than about 7,000 new housing units per year, or just 5 percent of all new housing built in that state.31 Since at least some of those 7,000 units would have been built even without the subsidies, the impacts of those programs on the general level of housing affordability have been negligible. Nor is there any guarantee that those programs particularly benefit low-income minorities, as the housing units they provide are often open to half the households in a region, that is, anyone whose income is no higher than median household incomes for their city or region, and such housing units cannot be legally dedicated to any specific minority.

A few urban

areas in states

that haven’t

passed growth-

management

laws have nev-

ertheless imple-

mented their own

growth-manage-

ment plans, led

by Boulder and

including Denver

and Fort Collins.

Lack of JustificationUnder HUD’s disparate impact rule, growth-management policies that make housing less affordable can still be justified if they are “necessary to achieve

one or more substantial, legitimate, nondiscriminatory interests of the respondent . . . or defendant.”32 The entity imposing those rules has the burden

10

of proof to show that they are legally justified, and such justification “must be supported by evidence and may not be hypothetical or speculative.”33

When states such as Hawaii, California, and Oregon, and urban areas such as Boulder and Denver adopted these policies, they initially justified them based on the supposed need to protect farms and open spaces. More recently, they have focused on the alleged benefits in the form of reduced driving, pollution, and energy consumption. Close scrutiny reveals that these purported justifications are either imaginary or provide too few benefits to justify the huge impacts on housing affordability and protected classes.

Growth management is hardly needed to protect prime farm lands. Nationwide, says the United States Department of Agriculture, the contiguous 48 states have more than 900 million acres of agricultural land (including cropland, pastureland, and rangeland), not counting lands owned by the federal government. Less than 40 percent of those acres are used for growing crops.34 Moreover, the number of acres needed for crop production has been declining because the per-acre productivities of most major crops, including barley, canola, corn, cotton, flax seed, peanuts, potatoes, rice, sorghum, soybeans, sugar beets, sunflowers, sweet potatoes, and wheat, have been growing faster than the nation’s population.35 Colorado has 36 million acres of agricultural lands, less than 8 million of which are used for growing crops.36

In short, growth boundaries and other growth-management policies are hardly needed to protect farms. Considering the nation has such an abundance of farmland and uses less than two-fifths of it for growing crops, the protection of such lands cannot justify policies that cause housing prices to rise by 50 to 300 percent or more,

making housing unaffordable to many protected minorities. As the Department of Agriculture itself concludes, “urbanization is not considered a threat to the nation’s food production.”37

Nor is growth management needed to protect open space. According to the 2010 census, only 1.5 percent of Colorado has been urbanized, while 98.5 percent of the state is rural.38 Counting both urban areas and rural developments, including roads, railroads, and any development larger than a quarter acre in size, the Department of Agriculture estimates that 2.9 percent of Colorado is developed while 97.1 percent of the state is rural open space.39

Boulder County is a little more developed than the state as a whole, but not much: the 2010 census found that less than 12 percent of the county was urbanized.40 Boulder is located close to millions of acres of national forests and other public lands; about 30 percent of Boulder County itself is in the Roosevelt National Forest or Eldorado Canyon State Park, both of which are open for public recreation.

Despite this abundance of open space, both the city of Boulder and Boulder County have purchased lands or easements that form a green belt around the city, limiting its growth and development. While the city of Boulder itself occupies less than 16,500 acres of land, the city has purchased more than 45,000 more acres to be preserved as open space.41 The county has purchased more than 61,000 acres plus conservation easements on more than 40,000 acres.42 The result is that the city and county together have purchased an area of land or easements totaling more than nine times the size of the city of Boulder.

More than 40,000 acres of this land is not open to the public but is private farm land on which the county has purchased

Considering the

nation has such

an abundance

of farmland and

uses only a third

of it for growing

crops, the protec-

tion of such lands

cannot justify

policies that cause

housing prices to

rise by 50 to 300

percent or more,

making housing

unaffordable to

many protected

minorities.

11

Rules that reduce

the energy con-

sumption and

emissions of

individual cars

can have a far

greater effect on

the environment

than rules that

attempt to reduce

per capita driving

by manipulating

urban form.

easements. Boulder’s greenbelt cannot be justified on the need to provide open space or recreation areas as these were already more than abundant in the region. Instead, the primary purpose of preventing

development on the Boulder city fringes is to make land in the city more expensive.

Alternative, Less Discriminatory PracticesIn contrast to the farmland justification for growth-management policies, air pollution, energy consumption, and traffic congestion are real issues. Yet growth management has minimal impact on these issues. Thanks to urban-growth boundaries imposed in the 1970s, for example, the average population densities of the San Francisco-Oakland and San Jose urban areas have increased by more than 60 percent since 1980. Despite that increase, per capita transit ridership has fallen by a third and per capita driving has increased.

In 2008, the Transportation Research Board asked University of California, Irvine, economist David Brownstone to review claims that growth management would reduce energy consumption and greenhouse gas emissions. After a thorough review of the literature, he found that there is a “statistically significant link” between urban form and driving, but that “the size of this link is too small to be useful” in reducing energy consumption or greenhouse gas emissions.43

To the extent that there is a link between growth management and measures of environmental quality such as air emissions and energy consumption, other policies, such as air pollution standards and (because most pollution takes place in congested traffic) actions to relieve congestion such as traffic signal coordination, can be far more effective at saving energy and reducing pollution while having no disparate housing

impacts on protected classes of people. HUD’s disparate impact rule states that, even if a defendant can prove that the challenged rules or policies might be justified based on other considerations, such policies may still violate fair housing rules if “the challenged practice could be served by another practice that has a less discriminatory effect.”44

Rules that reduce the energy consumption and emissions of individual cars can have a far greater effect on the environment than rules that attempt to reduce per capita driving by manipulating urban form. In 1970, many American cities had serious air quality problems, leading Congress to pass the Clean Air Act and create the Environmental Protection Agency (EPA). The EPA attempted to address air quality issues using a two-pronged approach: first by requiring auto manufacturers to build new cars that would meet increasingly stringent emissions rules; and second by encouraging cities to invest in urban transit and reshape themselves to favor alternatives to driving.

Since then, total transportation-related emissions have declined by more than 80 percent. Virtually all of this decline was due to reduced emissions from new cars. Today, many new cars produce as little as 1 percent as much toxic emissions as new cars in 1970, and the average car on the road produces less than 8 percent as much as the average in 1970. On the other hand, efforts to promote transit and change urban form have had almost no effect.

12

Zoning and land-

use regulation

have always been

a way of exclud-

ing undesirable

people and uses

from some neigh-

borhoods.

Despite spending hundreds of billions of dollars subsidizing transit since 1970, transit ridership has declined from about 50 trips per urban resident per year in 1970 to 40 trips per year today. As already noted, large increases in urban densities in the San Francisco Bay Area have failed to reduce per capita driving.

Boulder and Denver growth-management policies clearly meet the disparate-impact tests set by the Supreme Court majority. But at least some of those policies also meet the test set by the minority, as local officials have openly stated that they adopted the policies in order to attract high-income people to their region. Thus, these policies are actually examples of disparate treatment, since they are discriminating against low-income people who are disproportionately black or other protected minorities. However, proving intent may be much more difficult than proving disparate impacts, which may be one reason why the Supreme Court majority believed that no such proof was needed.

Zoning and land-use regulation have always been a way of excluding undesirable people and uses from some neighborhoods. “The basic purpose of suburban zoning was to keep Them where They belonged—Out,” says Rutgers planning professor Frank Popper. “If They had already gotten in, then its purpose was to confine Them to limited areas. The exact identity of Them varied a bit around the country. Blacks, Latinos, and poor people always qualified. Catholics, Jews, and Orientals were targets in many places.”45

In general, zoning was a tool used by the middle class to create neighborhoods suitable for middle-class homeownership.

Before the development of zoning, working-class families in American cities were actually more likely to own their own homes than middle-class families; the middle class preferred to rent so they could easily move if any working-class families moved in next door.46 In this context, middle

class refers to college-educated people with knowledge-oriented jobs while working class refers to non-college-educated people with labor-oriented jobs. Currently, about 30 percent of working-age Americans have bachelor’s degrees or better, suggesting that about 30 percent of American families are in the middle or upper classes while 70 percent are in the working or lower classes.

After Henry Ford made mass-produced automobiles affordable to the working class, working-class families priced out of housing in the cities by zoning could find low-cost land and build homes in unincorporated areas outside of the cities. When states began allowing, and in some cases requiring, counties to zone land, housing affordability again became a problem for many working-class families. It is worth noting that no one complained about urban sprawl when wealthy families began moving to the suburbs in the mid-19th century or when middle-class families began moving to the suburbs around 1890. It was only when working-class families began moving to the suburbs in large numbers after World War II that urban sprawl became an issue and middle-class planners began promoting urban-growth

Intent

13

boundaries and other policies to curb such sprawl by making single-family homes unaffordable to low-income and working-class families.

The Rise of the Creative Class, a 2002 book by urbanologist Richard Florida, argued that cities should promote economic growth by attracting members of the “creative class,” which he defined to include scientists, engineers, artists, and other “creative professionals.” Florida estimated that about 30 percent of working-age Americans were members of the creative class.47 Not coincidentally, this happens to equal the percentage of working-age Americans with college degrees. In other words, Florida’s creative class is identical to the middle class, and Florida’s prescription calls for cities to attract a higher percentage of middle-class workers than the national average, to the exclusion of working-class workers. His book might have been far less popular if he had used the terms middle class and working class instead of creative class and (by implication) non-creative class.

Among other things, one of the factors that Florida believes can attract members of the creative class is density. Based on an analysis showing that “creative” workers tend to work in dense areas (but without showing any causal relationships), Florida concludes that “density is a key component of knowledge spillovers and a key component of innovation.”48

The problem is that policies that promote density also make housing less affordable. As Harvard economist Edward Glaeser observes, such policies will make a region “less diverse and instead evolve into a boutique city catering only to a small, highly educated elite.”49

Florida’s ideas have become popular among urban planners and city officials who want to increase local tax revenues

by attracting higher-income residents. Numerous cities, including Austin, El Paso, Miami, Newark, and Seattle, have hired Florida to help them attract more creative workers. Florida has influenced even more cities by his work for the United States Conference of Mayors, National League of Cities, and various chambers of commerce and economic development groups.50

Florida himself has admitted that his policies harm low-income and working-class families. “Talent clustering provides little in the way of trickle-down benefits,” he says. He specifically points to higher housing costs eroding away any wage benefits enjoyed by working-class workers living in regions that have tailored themselves for the creative class. “There is a rising tide of sorts,” says Florida, “but it only lifts about the most advantaged third of the workforce, leaving the other 66 percent much further behind.” One result of such high housing costs, he continues, is that lower-income workers are often forced to migrate away from “knowledge-based metros.”51

The difficulty for those concerned about disparate treatment is in proving that the policies cities or regions adopt are aimed at attracting creative workers at the expense of others. While city officials may listen to, quote, and even hire Florida for his advice, their written plans usually contain more generic terms and only mention Florida’s ideas indirectly. According to the disparate-impact doctrine, such proof isn’t necessary to show that cities, metropolitan regions, and states may be guilty of policies that have disparate impacts on low-income minorities. But, for those who believe such proof should be required, in many cases there may be enough circumstantial evidence to allow Justice Alito and other judges to “sniff out pretext.”

The problem is

that policies that

promote density

also make hous-

ing less afford-

able.

14

In response to Boulder and Denver’s high housing costs, both cities have inclusionary zoning ordinances that require that homebuilders build or fund affordable housing. Denver’s ordinance requires builders of 30 or more homes to sell 10 percent to low-income families at below-market rates.52 Boulder’s ordinance requires that 20 percent be affordable or that builders pay the city’s affordable housing fund.53

In 2013, Denver’s ordinance was widely considered to be a failure, having led to the construction of just 7 units in 2012 and none in 2013.54 The city council made some minor adjustments to the ordinance in 2014, but these increased construction to just 22 units in 2015.55 Boulder’s is not much better: between 2010 and 2014, only about 250 affordable units were built because of the ordinance.56

Instead of improving housing affordability, inclusionary zoning actually makes housing less affordable. While a few lucky people benefit from those units, such ordinances

have been proven to harm all other renters and homebuyers.

First, inclusionary zoning leads builders to build fewer new homes overall. Second, it forces builders to charge more for the market-rate units they build. This in turn leads sellers of existing homes to raise their prices, thus reducing overall housing affordability.57 Even if these weren’t true, the fact that no more than 10 or 20 percent of new homes would be sold at “affordable” rates means there will never be enough affordable housing to go around, as far more than 20 percent of the region’s residents qualify as being low-income.58

In short, inclusionary zoning and similar measures that impose added costs on homebuilders, like the growth-management policies whose impacts they are supposed to remedy, actually have their own disparate impacts on low-income minorities. As such, they violate the Fair Housing Act just as much as the state’s urban-growth boundaries.

Inclusionary Zoning: Making the Problem Worse

While individual communities can subsidize (or force others to subsidize) the construction of a limited number of units of affordable housing, this won’t help most low-income families. Instead, the key to maintaining housing affordability is to allow builders unlimited access to vacant lands near the urban fringe. As soon as such access is limited, through growth boundaries, greenbelts, inflexible large-lot zoning, or other policies, housing prices climb even if there is supposedly plenty of vacant land within the urban area. This is because developing vacant parcels within the urban area is often more expensive

with lengthy permitting processes, and because when access is limited builders quickly buy all lands available for future development, thus driving up land prices within the urban area.

Simply expanding urban-growth boundaries is not sufficient to make housing affordable. The purpose of an urban-growth boundary is to prevent “leap-frog development” in which a new development is built several miles away from the urban fringe. Supposedly, such development is inefficient because services must be extended further than to

Remedies

Instead of improv-

ing housing afford-

ability, inclusionary

zoning actually

makes housing

less affordable.

While a few lucky

people benefit

from those units,

such ordinances

have been proven

to harm all other

renters and home-

buyers.

15

...the only way to

truly make Front

Range housing

affordable again

is to eliminate

most, if not all

state and county

land-use regula-

tion.

a development closer in. Yet in many cases leap-frog development is actually more efficient than development next to the urban fringe because large parcels of land are easiest to develop while land parcels near the urban fringe tend to be small and more expensive to develop.

In addition, the very existence of a boundary is going to keep land prices high, so a small expansion is not going to lead those prices to fall to what they were before the boundary was put in place. Finally, small expansions of a boundary do not necessarily allow developers to escape

from the stringent regulation and high system development charges imposed by cities within the boundary.

For these reasons, the only way to truly make Front Range housing affordable again is to eliminate most, if not all state and county land-use regulation. Giving landowners outside of the urban areas the freedom to develop their land with minimal regulation would put pressure on cities inside the current boundaries to reduce their regulation as well.

Numerous state and local laws, ordinances, regulations, and policies make housing less affordable, and in most if not all cases there is no legitimate rationale for those policies. Many of the reasons used to justify these policies, such as farmland preservation, are not legitimate because, for example, there is no shortage of farmland and urbanization does not present a threat to farm productivity. Other justifications, such as the need to save energy or reduce pollution, fail the “alternative practice” test in that an alternative policy could serve those needs just as well without have disparate impacts on minorities.

As such, Front Range land-use rules that limit development outside of urban zones should be repealed. Among other things, the Denver Regional Council of Governments should abandon its urban-growth boundary. Boulder and Denver should repeal their inclusionary zoning ordinances. Boulder should also sell some of its open space and greenbelt to developers to make room for new housing. Ordinances and other restrictions that seek to limit building permits should be repealed. For example, the Boulder Daily

Camera reported in January 2017 that Boulder County building permits have gone from $30,000 to $60,000 over the last seven years.59 “Boulder County has made it almost impossible to build an affordable house,” according to a homebuilder quoted in the article.

If DRCOG and the cities and counties are unlikely to do this themselves, those who support more affordable housing must turn to the courts. The first step is to file a complaint with the Department of Housing and Urban Development. The department then has 100 days to investigate the complaint. If the department takes no action after that time, the challenger can go to court.60

A primary target of such a complaint and lawsuit would be the state, whose rules limit development outside of urban zones. A second target could be cities and counties for their excessive system impact fees, design ordinances, inclusionary zoning, and other rules that make new developments more expensive.

Winners of fair housing cases are eligible to receive attorney fees.61

Challenging Land-Use Policies

16

Thanks to regional and local land-use regulations, Colorado’s housing has gone from being very affordable in 1969 to unaffordable today, while Boulder has become the nation’s least-affordable housing market outside of California, Hawaii, and New York City. The laws, ordinances, and rules that have made housing unaffordable have disparate impacts on low-income blacks and other low-income minorities, and these impacts have been revealed by the declining population of blacks in the city of Boulder and declines in the quality of housing for blacks in the Denver-Aurora urban area between 2000 and 2010.

While expansion of lands in Denver’s urban-growth boundary could provide some relief, the only real relief would come from elimination of those boundaries and repeal of local ordinances that make housing more expensive.

A successful challenge to the land-use laws that have made housing unaffordable could impose a cost on people who already own or are buying homes as they would likely see the value of their homes fall. This is an unavoidable result of correcting the artificial shortages imposed by misguided laws and regulations. The ones who would be hurt the most would be recent buyers who paid significantly more than homes should really cost. While it is tempting to argue that the government that caused the problem should offer some sort of compensation, the reality is that anyone who purchased a home did so knowing that there is no guarantee that home prices would be stable or growing.

Against this cost, the benefits of holding the state accountable for housing affordability problems would be enormous. Housing prices would fall, and

would thus take a much smaller share of the incomes of both renters and future homebuyers. Low-income families would especially benefit by gaining access to better quality housing at a lower cost. Moreover, housing is a bellwether for other sectors of the economy, so businesses would also see their rents decline. Homeownership would rise, giving more people access to the equity that comes with homeownership, equity that is often used to start new businesses. Between that equity and the lower cost of renting business properties, fixing Colorado’s housing affordability problems would lead to a surge in economic growth. Income inequality would tend to decline, partly because most of the costs of a correction would fall on relatively wealthy people while many of the benefits would be enjoyed by the less well off. All in all, these benefits vastly outweigh the costs.

Thanks to regional

and local land-

use regulations,

Colorado’s hous-

ing has gone

from being very

affordable in

1969 to unaf-

fordable today,

while Boulder

has become the

nation’s least-

affordable housing

market outside of

California, Hawaii,

and New York City.

Conclusion

17

1 438 U.S. 104 (1978).

2 545 U.S. 469 (2005).

3 Texas Department of Housing v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015).

4 Justice Anthony Kennedy, Id. at 1.

5 Justice Samuel Alito, Id. at 1.

6 Id. at 30 (Alito, J., dissenting).

7 Id. at 33 (Alito, J., dissenting).

8 Id. at 2 (Kennedy, J., majority opinion).

9 24 Code of Federal Regulations (CFR) 100.130.

10 24 CFR 100.70(d)(5).

11 24 CFR 100.500(a).

12 “Implementation of the Fair Housing Act’s Discriminatory Effects Standard; Final Rule,” Federal Register, February 15, 2013, p. 11460.

13 “Land Use Division,” Hawaii Office of Planning, 2016, http://planning.hawaii.gov/lud/.

14 “Percent Urban and Rural in 2010 by State and County” (spreadsheet), Census Bureau, Washington, 2012, www2.census.gov/geo/docs/reference/ua/PctUrbanRural_County.xls.

15 Edward L. Glaeser and Joseph Gyourko, The Impact of Zoning

on Housing Affordability, Cambridge, MA: Harvard Institute of Economic Research, 2002, p. 3.

16 G. Donald Jud and Daniel T. Winkler, “The Dynamics of Metropolitan Housing Prices,” Journal of Real Estate Research 23 (January-February 2002): 29–45.

17 C. Tsuriel Somerville and Christopher J. Mayer, “Government Regulation and Changes in the Affordable Housing Stock,” FRBNY Economic Policy Review, June 2003, p. 53.

18 Raven E. Saks, “Job Creation and Housing Construction: Constraints on Employment Growth in Metropolitan Areas,” Working Paper no. W04-10, Harvard University Joint Center for Housing Studies, Cambridge, MA, December 2004, p. iv.

19 Henry O. Pollakowski and Susan M. Wachter, “The Effects of Land-Use Constraints on Housing Prices,” Land Economics 66, no. 3 (August 1990): 323.

20 John M. Quigley, Steven Raphael, and Larry A. Rosenthal, “Measuring Land-Use Regulations and Their Effects in the Housing Market,” in Housing Markets and the Economy: Risk,

Regulation, and Policy, ed. Edward L. Glaeser and John M. Quigley (Cambridge, MA: Lincoln Institute, 2009), p. 296.

21 Theo S. Eicher, “Growth Management, Land Use Regulations, and Housing Prices: Implications for Major Cities in Washington State,” working paper, University of Washington, Seattle, 2008, tinyurl.com/3ol4u5k.

22 Haifang Huang and Yao Tang, “Residential Land Use Regulation and the US Housing Price Cycle Between 2000 and 2009,” University of Alberta working paper, 2011, p. 1, http://econpapers.repec.org/paper/risalbaec/2010_5f011.htm.

23 Paul C. Cheshire, Max Nathan, and Henry G. Overman, Urban

Economics and Urban Policy: Challenging Conventional Policy Wisdom (Northhampton, MA: Edward Elgar, 2014), pp. 83–84.

24 Andrew Oswald, “Theory of Homes and Jobs,” preliminary paper, 1997, tinyurl.com/2pfwvv.

25 Matthew Rognlie, “A Note on Piketty and Diminishing Returns to Capital,” MIT working paper, 2014, tinyurl.com/ntutcha.

26 “Gini Ratios for Families” and “Gini Ratios for Households,” Census Bureau, http://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-inequality.html.

27 2014 American Community Survey, Census Bureau, table B25003 for urbanized areas.

28 2000 census, table P003; 2010 census, table P1, for Boulder urbanized areas.

29 2000 census, tables HCT030A and HCT030B; 2010 census, tables B25032A and B25032B for Denver-Aurora urbanized area.

30 2000 census, tables H011A and H011B; 2010 census, tables H11A and H11B for Portland urbanized area.

31 California’s High Housing Costs: Causes and Consequences (Sacramento: Legislative Analyst, 2015), p. 7.

32 24 CFR 100.500(b)(1)(i).

32 24 CFR 100.500(b)(2).

34 2012 National Resources Inventory, Summary Report (Washington: Natural Resources Conservation Service, 2015), p. 3-39; Alaska

Summary Report, 2007 National Resources Inventory, Washington, DC: Natural Resources Conservation Service, 2009, p. 7.

35 According to Crop Production Historical Track Records, Washington, DC: Department of Agriculture, 2014, the per-acre yields of most crops grew faster than the population between 1980 and 2010.

36 2012 National Resources Inventory, p. 3-24.

37 Natural Resources Inventory: Highlights (Washington, DC: USDA, 2001), p. 1.

38 “Percent Urban and Rural in 2010 by State and County” (spreadsheet), Census Bureau, Washington, 2012, www2.census.gov/geo/docs/reference/ua/PctUrbanRural_County.xls.

Endnotes

18

39 2012 National Resources Inventory, p. 3-6.

40 “Percent Urban and Rural in 2010 by State and County,” Census Bureau.

41 “Land Acquisition Program,” City of Boulder, 2016, tinyurl.com/BoulderCityLandAcq.

42 “Acres of Boulder County Parks & Open Space,” Boulder County, 2016, tinyurl.com/BoulderCtyLandAcq.

43 David Brownstone, “Key Relationships Between the Built Environment and VMT,” Transportation Research Board, 2008, p. 7, http://onlinepubs.trb.org/Onlinepubs/sr/sr298brownstone.pdf.

44 24 CFR 100.500(c)(3).

45 Frank Popper, The Politics of Land-Use Reform, Madison, WI: University of Wisconsin Press, 1981, p. 54.

46 Randal O’Toole, American Nightmare: How Government Undermines the Dream of Homeownership, Washington, DC: Cato Institute, 2012, p. 40.

47 Richard Florida, “Cities and the Creative Class,” Cities &

Community 2:1 (March 2003), p. 8.

48 Brian Knudsen, Richard Florida, Gary Gates, and Kevin Stolarick, “Urban Density, Creativity, and Innovation,” creativeclass.com, 2007, p. 1, tinyurl.com/5dsanj.

49 Edward Glaeser, The Economic Impact of Restricting Housing Supply (Cambridge, MA: Rappaport Institute, 2006), p. 2, http://www.americandreamcoalition.org/housing/housing_final.pdf.

50 “Clients: Economic Dev. & Government,” creativeclass.com/clients.

51 Richard Florida, “More Losers Than Winners in America’s New Economic Geography,” The Atlantic Citylab, January 30, 2013, tinyurl.com/p3kjddc.

52 “Denver Inclusionary Housing Ordinance,” Denver Office of Economic Development, 2015, p. 1, tinyurl.com/DenverIZ.

53 “Inclusionary Housing (IH),” City of Boulder, 2016, tinyurl.com/BoulderIZ.

54 Steve Raabe, “Denver to Address Failure of Affordable-Housing Effort,” Denver Post, July 27, 2013, tinyurl.com/DPIZFailed.

55 Anthony Cotton, “Amid Much Debate, Affordable Housing Bill Narrowly Advances,” Denver Post, August 19, 2014, tinyurl.com/DPIZRevised.

56 “2015 Affordable Housing Trends,” City of Boulder, 2015, p. 1, tinyurl.com/BoulderTrends.

57 Tom Means, Edward Stringham, and Edward Lopez, Below-Market

Housing Mandates as Takings: Measuring their Impact (Oakland, CA: Independent Institute, 2007), p. 1.

58 American Community Survey, Census Bureau, table S1901 for Portland urbanized area.

59 Shay Castle, “New housing forming at astonishing rate, as Boulder County lags,” Boulder Daily Camera, Jan. 21, 2017. http://www.dailycamera.com/boulder-business/ci_30740298/new-households-forming-at-astonishing-rate-boulder-county

60 Fair Housing Act, section 810 (42 U.S.C. 3610).

61 Fair Housing Act, section 812(p) (42 U.S.C. 3612(p)).

19

Copyright ©2017, Independence Institute

INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and constitutional rights.

JON CALDARA is President of the Independence Institute.

DAVID KOPEL is Research Director of the Independence Institute.

RANDAL O’TOOLE is the director of the Independence Institute’s transportation policy center. He has written several books including American Nightmare:

How the Government Undermines the Dream of Homeownership. He has also taught environmental economics at Yale, University of California at Berkeley, and Utah State university.

ADDITIONAL RESOURCES on this subject can be found at: http://www.i2i.org/fiscal

NOTHING WRITTEN here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.

PERMISSION TO REPRINT this paper in whole or in part is hereby granted provided full credit is given to the Independence Institute.

20

Notes

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